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RBS seeks care merger for Priory and Four Seasons

THE Royal Bank of Scotland (RBS) is holding discussions about merging the Priory and Four Seasons, a move that would lead to a radical shake-up of Britain’s healthcare sector.

The merger would create a company with an enterprise value of least £2 billion and is seen as an elegant solution to RBS’s exposure to two heavily indebted companies. The bank has confirmed that discussions are taking place.

RBS acquired the Priory, the rehabilitation chain well known for treating troubled celebrities, when it took over ABN Amro. It is the biggest investor ahead of Lord Ashcroft, who owns 35%. The company now has debts topping £800m and its equity is worthless.

The Edinburgh-based bank is also lead lender to Four Seasons, the nursing-home giant. Not only is it exposed to the debt, it owns about £100m of “piks” (payments in kind), which yielded 22% and now have no value.